Happy New Year! Prepare for 2025 with a Comprehensive Legal Checkup

Happy New Year! Prepare for 2025 with a Comprehensive Legal Checkup 

The start of a new year is the perfect time to review your business's legal framework and reflect on what went right or wrong in the prior year. Galvanize Law recommends conducting a thorough checkup to help mitigate risk, ensure compliance with current law, improve efficiency, and enhance your bottom line. Key areas to focus on include: 

Contract and Proposal Review 
Ensure that your standard contracts and proposal documents reflect the latest legal developments and industry practices. Consider updating and including: 

• Clear payment terms - Ensure language around payment schedules and deadlines promotes timely invoicing and minimizes disputes. This is crucial for subcontractors reliant on upstream payments.  

• Interest and collection provisions – Include terms allowing for recovery of interest (e.g., 1.5% per month or 18% per annum), collection costs, and attorneys' fees for overdue payments or in the event of enforcement actions. 

• Delay and price adjustment clauses - Address delays by allowing for equitable adjustments to schedule changes, material price increases, and additional labor costs, which are essential for subcontractors navigating fluctuating supply conditions. 

• Indemnification clarity – Use clear indemnification clauses limiting liability to the extent of available insurance coverage and specifying responsibility for bodily injury and property damage. Avoid agreeing to a duty to defend, if possible. 

• Warranty definitions - Clearly define the scope, duration, and limitations of your workmanship and material warranties and exclusions. 

• Force Majeure protection - Protect against liability for delays caused by uncontrollable factors, such as supply chain disruptions or natural disasters. 

Insurance Requirements and Additional Insured Endorsements 
Protect your projects by reviewing and updating your insurance policies. Contractors and subcontractors should prioritize: 

• Additional insured endorsements – Ensure proper parties are named as additional insureds on all relevant insurance policies.  

• Certificate compliance – Confirm that all insurance certificates are up to date and meet contractual obligations. 

• Coverage sufficiency – Verify that coverage limits adequately address potential project risks, including general liability, workers' compensation, and umbrella policies. 

• Contract clarity on insurance – Outline insurance responsibilities and include waivers of subrogation to reduce liability disputes. 

Employee vs. Independent Contractor and Exempt v. Non-Exempt Classifications 
With evolving labor laws, misclassification can lead to significant penalties. Employers managing diverse workforces should: 

• Verify classifications – Ensure independent contractors meet state and federal requirements and proper exemption classification for true employees. 

• Clarify contracts – Update agreements to explicitly define the nature of employment/contractor relationships. 

• Maintain records – Keep thorough documentation supporting each classification decision. 

• Regular audits – Periodically review worker roles to ensure classifications align with evolving job duties. 

Mechanics’ Lien Management and Deadline Tracking 
Protecting payment rights is essential for the construction industry. Stay on top of lien laws by: 

• Tracking deadlines – Calendar all lien filing and notice deadlines for each project. We recommend starting the lien process at least 60 days before the filing deadline. 

• Reviewing lien waivers – Ensure lien waiver language protects your interests and preserves payment rights. 

• Monitoring waivers downstream – Verify that subcontractors and suppliers provide timely lien waivers to avoid project delays and payment disruptions. 

• Educating staff – Regularly train project managers and staff on lien rights, procedures, and deadlines to reduce risks and enforce compliance. 

Document Retention and Best Practices 
Comprehensive documentation is critical to protecting your business in the event of a dispute. Businesses should: 

• Promptly respond to notices – Depending on your contract language, you may have a very short window of time to assert certain rights and claims. Having a clear system in place to promptly respond to notice of delay, to cure, or back charges is crucial. 

• Audit retention policies – Regularly review document retention and digital recordkeeping practices. 

• Streamline processes – Implement efficient procedures for saving project documentation. 

• Ensure accessibility – Maintain accessible records of contracts, change orders, and correspondence. 

• Follow retention protocols – Develop clear protocols for document retention and destruction that comply with state and federal regulations. 

Other General Employment Law Considerations

It is essential to periodically review employment policies and practices to ensure compliance with state and federal laws, especially when managing a multi-state workforce or adapting to evolving legal requirements. Key areas to consider:

Considerations for Employees in States Other than Colorado

• Where are your Employees? - Understand which states your employees live and work in and the type of work being performed. Labor law vary significantly by jurisdiction and may impact wage requirements, overtime calculations, leave entitlements, and employee agreements.

• Remote Work Policies – For employees working remotely, ensure compliance with state-specific regulations regarding taxes, wages and hour laws, and workplace accommodations.

Compliance with Colorado NDA Requirements

• Review any non-disclosure agreements (NDAs) to ensure they meet Colorado’s legal standards, including the requirements for enforceability under state law. Consider whether NDAs are appropriately tailored to protect legitimate business interests without overreach.

Employee Handbooks 

• Do you have a Handbook? - Ensure your employee handbook exists and is comprehensive, covering all necessary policies and procedures 

• Compliant Language – Verify the inclusion of legally required policies and updates such as: 

• 401K plan information, if applicable 

• Paid Time Off (PTO) policies, ensuring compliance with state-mandated paid sick leave and vacation requirements.  

• FAMLI Leave (Family and Medical Leave Insurance program), outlining rights and responsibilities under Colorado law.  

• Child support withholding obligations, ensuring clarity in compliance with garnishment requirements.  

• Regular Updates – Regularly review and update the Handbook to reflect legal developments and evolving business practices.  

Do you have questions about how to use the checklist with your construction business, or would like expert assistance implementing it? Contact one of Galvanize Law's skilled Colorado business attorneys today.